Date posted: 29/04/2021

Anti-money laundering regime in New Zealand

Understand how rules around anti money laundering (AML) and counter terrorism financing (CTF) apply to members in New Zealand

In brief

  • Anti-money laundering and counter-terrorism financing legislation has been implemented in New Zealand in two phases. Phase 2 of the regime commenced in New Zealand for accountants performing captured activities from 1 October 2018.
  • The Department of Internal Affairs (DIA) is the supervisor for accountants under the AML CTF Act.
  • The DIA and CA ANZ have published a range of materials and guides and CA ANZ is part of the DIAs Industry Advisory Group.

Anti-money laundering and counter-terrorism financing legislation has been implemented in New Zealand in two phases.

The coverage of the regime is activity based - it captures entities who carry on one or more of a set of prescribed activities. Generally, these activities involve dealing with client assets on their behalf. This might involve actually conducting transactions on their behalf, or giving instructions to a third party to conduct the transactions. Either way, the business undertaking captured activities will be a 'reporting entity' for AML purposes and subject to full compliance requirements.

Phase 1

Phase 1 has been in effect for a number of years and applies to banks, casinos and a range of financial service providers. When Phase 1 commenced, the intention to extend the legislation to cover accountants and other designated non-financial businesses and professions (DNFBPs) was signalled. Many accountants were exempt from Phase 1 of the regime.

Phase 2

Phase 2 of the regime commenced in New Zealand for accountants performing captured activities from 1 October 2018. 

The supervisor of all Phase 2 reporting entities is the Department of Internal Affairs (DIA). 

In addition to this, the New Zealand Financial Intelligence Unit (FIU) provides financial intelligence relating to suspicious transactions/activity, money laundering, the financing of terrorism and other serious offences. The FIU helps the New Zealand government fulfil its obligations to the inter-governmental Financial Action Task Force (FATF), the government's organised crime strategy and the prevention and detection of serious crime.

Scope

A reporting entity is an accounting practice that, in the ordinary course of business, carries out one or more of the activities described in the definition of "designated non-financial business or profession" in section 5(1) of the Act.

Obligations

  • Appoint a Compliance Officer to administer and maintain the AML/CFT programme
  • Produce a written risk assessment that addresses the risks the reporting entity may reasonably expect to face
  • Establish a written AML/CFT programme based on the risk assessment containing internal procedures, policies and controls to address AML/CFT risk
  • Perform customer due diligence (CDD) including verifying customer identity
  • Report suspicious activities to the New Zealand Police's Financial Intelligence Unit (FIU)
  • Report prescribed transactions (domestic cash transactions of $10,000 or more and international wire transfers of $1,000 or more) to the New Zealand Police’s Financial Intelligence Unit (FIU)
  • Submit an annual report to the AML/CFT supervisor
  • Obtain an assurance engagement over the risk assessment and AML/CFT programme every two years.

Supervision

New Zealand follows a multi-agency supervision model.

  • The Reserve Bank (RBNZ) - banks, life insurers, and non-bank deposit takers
  • The Financial Markets Authority (FMA) - securities, trustee corporations, futures dealers, collective investment schemes, brokers and financial advisers
  • The Department of Internal Affairs (DIA) - all Phase 2 reporting entities (accountants, lawyers, real estate agents, conveyancers, high-value dealers and the NZ Racing Board), casinos, money changers, trust and company service providers, and other reporting entities not covered by the RBNZ or the FMA.

Penalties

A reporting entity that commits an offence under the Act is liable, if convicted, to a fine of up to $5 million.

An individual who commits an offence under the Act is liable, if convicted, to up to two years imprisonment and a fine of up to $300,000.

Resources

The DIA has produced a wealth of resources to assist accountants, including a Guide, and these can be found below:

This provides the DIA's interpretation of the AML/CFT Act in the context of the accounting profession, and translates 'captured activities' into accounting services to help you work out if your business is an AML 'reporting entity'. A summary of all the regulations and guidance that is available can be found below.

The guidance also includes commentary on tax transfers. CA ANZ has applied for an exemption for tax transfers. Information on the current status of the exemption is available below:

CA ANZ has also developed a range of guides to help New Zealand members comply with the AML/CFT Act, which can be accessed via the sidebar.

Industry Advisory Group

CA ANZ is part of the DIA's Industry Advisory Group (IAG). The DIA has established this forum as a communication pathway with representatives of the sectors it supervises under the AML/CFT regime. CA ANZ welcomes this initiative by the DIA.

The IAG meets quarterly and was established in August 2019. Members of the IAG include representatives of peak industry bodies who come together to share knowledge and discuss common AML/CFT compliance challenges facing their sectors. The intention is to develop understanding between DIA and the supervised sectors and to work together to find constructive solutions. The forum also provides co-design opportunities on engagement and guidance programmes. Peak industry bodies are able to share general information and updates from the forum with their supervised sectors.

CA ANZ looks forward to continued engagement in the IAG and the opportunity it provides to assist accountants with meeting their AML/CFT obligations. Members are encouraged to provide feedback to CA ANZ about specific AML/CFT concerns facing the accountancy profession via [email protected].

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